The South African Reserve Bank has announced an update to the repo rate, which affects the official rate of interest used to calculate taxable benefits on low-interest or interest-free employee loans. The revised rate is effective 1 December 2025.
Legislative Update
- In terms of paragraphs 2(f) and 11 of the Seventh Schedule to the Income Tax Act, when an employee is granted a loan by their employer at an interest rate below the official rate, the difference between the employer-charged rate (if any) and the official rate must be treated as a taxable fringe benefit.
- The official rate of interest is defined as the South African repurchase rate (repo rate) plus 100 basis points (1%).
- Following the repo rate decrease from 7.00% to 6.75% on 21 November 2025, the official interest rate has been adjusted from 8.00% to 7.75%, effective 1 December 2025.
Impact on the Deel Local Payroll System
- The updated official interest rate of 7.75% has been applied in the payroll system as of 1 December 2025.
- Any open payslips containing the Loan Deduction Fringe Benefit component have been recalculated to reflect the new rate.
- All relevant statutory components have been automatically updated.
Customer Action Required
- Review your December 2025 payroll reports to ensure the updated official rate has been applied correctly.
- Confirm that any custom fringe benefit components referencing the previous rate have been updated.
- No further action is required unless your organisation uses custom configurations.
